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New York State Bans Cryptocurrency Mining

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New York State Senate passed a bill banning cryptocurrency mining through Proof of Work (PoW). However, the law will only prohibit the installation of new projects, without prejudice to activities that are already in operation.

The law was passed on Friday morning and establishes a two-year moratorium on the installation of new projects. That is, no mining company will be able to open new units in the state until at least 2024.

The project intends to reduce the supposed environmental impact of the mining activity. In fact, the high consumption of electricity has already made the governor of New York, Kathy Hochul, advocate restrictions on the activity.

However, the Senate passed the law with a very narrow margin of votes. Of the state senators, 36 voted for approval, while 27 voted against.

Two-year moratorium

In addition to existing companies, the law will also not prohibit mining companies that are in the process of renewing their license. According to Kevin Parker, the senator who designed the project, only one of the mining companies operating in the state meets this criterion.

In other words, the law could really wipe out the mining industry in New York. This is the second strongest step since the state approved BitLicence in 2015. As a result, several companies have left the region and established themselves in other states across the country.

During the moratorium, the state will conduct a study on the potential environmental impact of mining via PoW. In the meantime, senators can revoke the law if studies fail to detect that mining causes negative impacts on the environment.

No one expected the bill to pass the Senate, as the Senate Environmental Conservation Committee refused to consider the bill during its last session. Despite environmental concerns, the Senate feared it would cause a flight of companies and wealth if it passed the law.

In fact, this was the warning made by the chairman of the committee, Senator Todd Kaminsky. For the senator, the project would bring “deleterious economic consequences for New York”.

However, the Senate Energy and Telecommunications Committee forwards the bill at the last minute. Then, the Senate floor began voting on the bill. Finally, they approved the law a few hours before the closing of activities.

Now, the bill goes to Governor Kathy Hochul’s desk. If the representative signs, the law will take effect immediately.

State must lose revenue

New York is seen as a strategic location for mining companies in the United States. The state has hydroelectric power sources that are both cheap and renewable. But, on the other hand, it also uses a lot of energy generated by burning coal.

Because of this component, local politicians view mining as risky. But they also ignore the fact that companies use other sources – which are renewable. For example, mining company Greenidge renovated an entire unit, switching energy from coal to natural gas.

Even coal sources can still be turned into clean energy through mining. Stronghold created a process that uses mineral residues in the activity. As a result, mining reuses energy and also removes pollutants from nature.

New York-based mining companies have threatened to leave the state if the moratorium is passed. Many have already stated that they intend to migrate their activities to Texas, where energy is cheaper and the business environment is more favorable.

Industry protests against law

Unsurprisingly, many mining industry supporters attacked the bill passed by the Senate. For most, the law actually serves as a “ban” on mining.

John Olsen, lobbyist for the BTC Association, was emphatic: he fears that the moratorium will be turned into a ban over the next two years. That could scare away companies looking to set up shop near New York or in the state itself.

For Clark Vaccaro, acting president and chief strategy officer at the Basic Industry Trade Organization, the project’s approval “is a dark day for blockchain technology, effectively closing the door on a nascent industry.”

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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